Mohamed I. Elghuweel, Collins G. Ntim, Kwaku K. Opong and Lynn Avison
The purpose of this paper is to examine the impact of corporate (CG) and Islamic (IG) governance mechanisms on corporate earnings management (EM) behaviour in Oman.
Abstract
Purpose
The purpose of this paper is to examine the impact of corporate (CG) and Islamic (IG) governance mechanisms on corporate earnings management (EM) behaviour in Oman.
Design/methodology/approach
The authors employ one of the largest and extensive data sets to-date on CG, IG and EM in any developing country, consisting of a sample of 116 unique Omani listed corporations from 2001 to 2011 (i.e. 1,152 firm-year observations) and a broad CG index containing 72 CG provisions. The authors also employ a number of robust econometric models that sufficiently account for alternative CG/EM proxies and potential endogeneities.
Findings
First, the authors find that, on average, better-governed corporations tend to engage significantly less in EM than their poorly governed counterparts. Second, the evidence suggests that corporations that depict greater commitment towards incorporating Islamic religious beliefs and values into their operations through the establishment of an IG committee tend to engage significantly less in EM than their counterparts without such a committee. Finally and by contrast, the authors do not find any evidence that board size, audit firm size, the presence of a CG committee and board gender diversity have any significant relationship with the extent of EM.
Originality/value
To the best of the authors’ knowledge, this is a first empirical attempt at examining the extent to which CG and IG structures may drive EM practices that explicitly seek to draw new insights from a behavioural theoretical framework (i.e. behavioural theory of corporate boards and governance).
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Collins G. Ntim, Kwaku K. Opong, Jo Danbolt and Frank Senyo Dewotor
The purpose of this paper is to investigate and compare the weak‐form efficiency of a set of 24 African continent‐wide stock price indices and those of eight individual African…
Abstract
Purpose
The purpose of this paper is to investigate and compare the weak‐form efficiency of a set of 24 African continent‐wide stock price indices and those of eight individual African national stock price indices.
Design/methodology/approach
Variance‐ratio tests based on ranks and signs were used to examine the weak‐form efficiency of the 32 stock price indices investigated.
Findings
On average, it was found that irrespective of the test employed, the returns of all the 24 African continent‐wide stock price indices examined in the study are less non‐normally distributed compared to the eight individual national stock price indices examined. The authors also report evidence of the African continent‐wide stock price indices having significantly better weak‐form informational efficiency than their national counterparts.
Practical implications
The policy implication of this evidence is that the African equity price discovery process can be significantly improved if African stock markets integrate their operations. Economically, this may contribute to improved liquidity and more efficient allocation of capital, which in turn can be expected to have a positive impact on economic growth.
Originality/value
The paper makes two major contributions to the extant literature. First, it offers for the first time a comparative analysis of the informational efficiencies of a sample of national stock price indices as against African continent‐wide stock price indices. Second, there is no prior evidence as to whether African stock markets can improve their informational efficiencies by integrating their operations. The paper fills this gap by demonstrating that the African equity price formation process can be improved if African stock markets integrate their operations.
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Collins G. Ntim, Kwaku K. Opong, Jo Danbolt and Dennis A. Thomas
The purpose of this paper is to investigate as to whether post‐Apartheid South African (SA) listed corporations voluntarily comply with and disclose recommended good corporate…
Abstract
Purpose
The purpose of this paper is to investigate as to whether post‐Apartheid South African (SA) listed corporations voluntarily comply with and disclose recommended good corporate governance (CG) practices and, if so, the major factors that influence such voluntary CG disclosure behaviour.
Design/methodology/approach
The paper constructs a broad voluntary CG disclosure index containing 50 CG provisions from the 2002 King Report using a sample of 169 SA listed corporations from 2002 to 2006. The authors also conduct regression analysis to identify the main drivers of voluntary CG disclosure.
Findings
The results suggest that while compliance with, and disclosure of, good CG practices varies substantially among the sampled companies, CG standards have generally improved over the five‐year period examined. The authors also find that block ownership is negatively associated with voluntary CG disclosure, while board size, audit firm size, cross‐listing, the presence of a CG committee, government ownership and institutional ownership are positively related to voluntary CG disclosure.
Practical implications
These findings have important implications for policy‐makers and regulators. Evidence of improving CG standards implies that efforts by various stakeholders at improving CG standards in SA companies have had some positive impact on CG practices of SA firms. However, the substantial variation in the levels of compliance implies that enforcement may need to be strengthened further.
Originality/value
There is a dearth of evidence on the level of compliance with the King Report. This study fills this gap by providing evidence for the first time on the level of compliance achieved, as well as contributing generally to the literature on compliance with codes of good governance and voluntary disclosure.
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Ferdy Putra and Doddy Setiawan
This paper aims to synthesize the diverse literature on nomination and remuneration committees and provide avenues for future research.
Abstract
Purpose
This paper aims to synthesize the diverse literature on nomination and remuneration committees and provide avenues for future research.
Design/methodology/approach
This study provides a comprehensive literature review of theoretical and empirical studies published in reputable international journals indexed by Scopus.
Findings
The literature review reveals several aspects of the nomination and remuneration committee. These aspects have been classified into the definition of the nomination and remuneration committee, dimensions of the nomination and remuneration committee, measurement and research review results, reasons for conflict empirical findings, company dynamics and research on moderators, as well as recommending future research.
Research limitations/implications
Our literature review shows that nomination and remuneration committees play a role in improving board performance and company performance, reducing agency conflicts and improving corporate governance to provide implications for companies, regulators and investors and pave the way for future research.
Originality/value
This paper identifies issues related to nomination and remuneration committees, their theoretical and practical implications and avenues for future research.
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Emmanuel Joel Aikins Abakah, Paul Alagidede, Lord Mensah and Kwaku Ohene-Asare
The purpose of this paper is to re-examine the weak form efficiency of five African stock markets (South Africa, Nigeria, Egypt, Ghana and Mauritius) using various tests to assess…
Abstract
Purpose
The purpose of this paper is to re-examine the weak form efficiency of five African stock markets (South Africa, Nigeria, Egypt, Ghana and Mauritius) using various tests to assess the impact of non-linearity effect and thin trading which are prevalent in African markets on market efficiency.
Design/methodology/approach
The weekly returns of S&P/IFC return indices for five African countries over the period 2000-2013 were obtained from DataStream and analyzed. The study adopted the newly developed Non-Linear Fourier unit root test advanced by Enders and Lee (2004, 2009) which allows for an unknown number of structural breaks with unknown functional forms and non-linearity in data generating process of stock prices series to test the Random Walk Hypothesis (RWH) for the five markets, and an augment regression model.
Findings
In light of the empirical evidence the author(s) using Non-linear Fourier Unit Root Test only fail to reject the RWH for South Africa, Nigeria and Egypt leading to the conclusion that these markets follow the RWH and weak-form efficient whilst Ghana and Mauritius are weak-form inefficient. Besides, evaluating non-linear models without adjusting for thin trading effect shows that, South Africa and Ghana markets are weak-form efficient while Nigeria, Egypt and Mauritius are not. However, after accounting for thin trading effect, the author(s) find that South Africa and Egypt markets follow the RWH. The findings imply that market efficiency results depend on the methodology used.
Originality/value
This paper provides further evidence on stock market efficiency in emerging markets. The finding suggests that thin trading and non-linearity effect influences markets efficiency tests in African stock markets. Thus, recent structural adjustment and liberalization policies have not enhanced stock market operations in Africa. This paper therefore has implications for policy makers and international investors.
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Daniel Kipkirong Tarus and Fiona Jepkosgei Korir
This paper examines how board structure influences real earnings management and the interaction effect of CEO narcissism on board structure-real earnings management relationship.
Abstract
Purpose
This paper examines how board structure influences real earnings management and the interaction effect of CEO narcissism on board structure-real earnings management relationship.
Design/methodology/approach
The authors used panel data derived from secondary sources from publicly listed firms in Kenya during 2002–2017. Hierarchical regression analysis was used to test the hypotheses.
Findings
The results indicate that board independence, board tenure and size have significant negative effect on real earnings management, while CEO duality positively affects real earnings management. Further, the interaction results show that CEO narcissism moderates the relationship between CEO duality and real earnings management.
Research limitations/implications
The results suggest that real earnings management reduces when boards are independent, large and comprising of long-tenured members. However, when the CEO plays dual role of a chairman, real earnings management increases. The authors also find that when CEOs are narcissists, the monitoring role of the board is compromised.
Originality/value
The study adds value to the understanding of how board structure and CEO narcissism influence the monitoring role of the board among firms listed at Nairobi Securities Exchange.
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Philip A. Hamill, Pat McGregor and Symaralah Rasaratnam
While existing UK studies conduct a cross‐sectional analysis, this paper seeks to argue that the ratio of Executive Directors to non‐executive director (NED) on the boards of UK…
Abstract
Purpose
While existing UK studies conduct a cross‐sectional analysis, this paper seeks to argue that the ratio of Executive Directors to non‐executive director (NED) on the boards of UK firms, coupled with a gradual appointment process, motivated by firms’ desire to comply with the recommendations of the Cadbury report, has the potential to produce a temporal effect.
Design/methodology/approach
Data for this study were collected from January 1990 to May 2000.
Findings
The empirical analysis suggests that a temporal pattern does exist. Two distinct periods were identified. In the initial period, prior to March 1998 the market viewed NED appointments favourably. After March 1998 NED appointments were no longer significant economic events. Overall, it appears that the market viewed the appointment of NEDs to the boards of FTSE 350 firms favourably; suggesting that such appointees were viewed as a significant input by firms as they attempted to achieve an optimal corporate governance mix.
Originality/value
This paper contributes to the small body of literature on the market's perception of the value of non‐executive, outside, director appointments to FTSE‐350 firms from 1990 to 2000.